Child care fees bounce back in Q2 2023 erasing prior year savings says ABS report

Childcare prices increased by 9.5 per cent in the three months to June 2023 (compared to the same period last year) marking a bounce back in fees that has largely consumed the Child Care Subsidy affordability measures passed by former Prime Minister Scott Morrison in March 2022 according to the most recent ABS CPI release. 

 

The quarterly ABS release, which measures net out of pocket expenses after the Child Care Subsidy (CCS), for families living in Australia’s largest metropolitan areas highlights once again how quickly affordability measures passed by the Government are eradicated by the broader trend of rising fees. 

 

Compared to March 2022, which was the previous high water mark prior to the implementation of more affordable care for families with more than one child in care, only Melbourne and Hobart have prices below that level. 

 

 

After just 12 months, Canberra is now 5.5 per cent above the levels recorded in March after a bumper 11.8 per cent increase in the June quarter 2023 closely followed by Adelaide which is 5.1 per cent higher after an increase of 11.8 per cent last quarter. 

 

This experience is not limited to just the affordability measures passed last year. Looking back to the implementation of the Child Care Subsidy in July 2018 savings that were created were largely consumed in March 2020, just before COVID-19 hit. 

 

The consequent shock to the early childhood education and care (ECEC) system that transpired, the emergency packages implemented, and the slow recovery meant that it took some additional time for prices to catch back up but now, on average across Australia prices are 6 per cent higher at an out of pocket level than they were in Mid 2018. 

 

 

Perth stands out as the prime mover with Melbourne a clear laggard relative to other large cities although it’s not clear why Melbourne as a collective has erred on the side of caution when it comes to longer term fee increase behaviour. 

 

Out of pocket expenses have now, on average, exceeded the previous high point recorded in March 2022 which is interesting to note given this data was pulled prior to the latest round of CCS affordability measures that came into effect in early July 2023. 

 

 

With much focus on the ACCC’s ECEC price inquiry fee increase practices in the three months to September 2023 will be very closely watched, but if past experience is anything to go by we can expect net out of pocket expenses to pull back materially compared to the prior period ie: three months to June 2023. 

 

The next ABS release will be on 25 October 2023.